D.B. Zwirn & Co. will shutter its two largest hedge funds, as investors stormed the exits in the wake of an accounting scandal.

The New York-based hedge fund told investors that it would liquidate both the domestic and offshore versions of its Special Opportunities Fund, which together manage some $4 billion. Investors sought to redeem more than half that total, despite the fund’s strong performance; the onshore fund returned 11% and the offshore fund 7% last year.

Early last year, Zwirn told investors that it had uncovered improper accounting during its 2006 financial audit. An internal investigation turned up improper financial transfers and accounting of expenses, including those for founder Daniel Zwirn’s use of a private jet. According to the firm, it has resolved the issues that led to the problems and reimbursed investors, with interest.

The firm will reveal its plan for returning the assets next month. Published reports indicate that it could take as long as four years to liquidate the funds; some 60% of its assets are invested in illiquid securities, including private equity investments and debt-based derivatives.

Zwirn said it would continue to manage the $1 billion in assets that remain after the Special Opportunities liquidation.

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Forecasting markets has always been fraught with danger for analysts and traders alike. MODERN TRADER has dedicated issues detailing the pitfalls of following so-called markets gurus. Too often these market experts are allowed to flaunt their winning forecasts and let their losers fade into the background.